Grand Rapids and Pittsburgh

Metro Grand Rapids’ economy was in the news twice recently. One very positive story, the other not so much. Both are accurate. The differences between the two highlight the importance of how you define economic success.

The positive story comes from Bridge Magazine. It documents the strong job growth metro Grand Rapids has enjoyed. Bridge writes: “But nowhere is Michigan shining brighter than West Michigan, where two counties, Kent and Ottawa, account for one fifth of all new jobs in the state, despite comprising just one-tenth of the population. In Ottawa, the April jobless rate was 2.7 percent. It was 2.9 percent in Kent. Both are historic lows not seen since 2000.” Good news indeed.

The not so positive story comes from a new study by the Economic Policy Institute which found that Grand Rapids has the worst income inequality of any Michigan metropolitan area. With the top one percent making 25 times the bottom 99 percent. What probably matters most to most people is the average income of the 99 percent in West Michigan is $41,061 compared to a national average for the bottom 99 percent of $45,567.

As the Bridge story eludes to, West Michigan has low unemployment but also low wages. So if your measure of economic success is how many people are working metro Grand Rapids is clearly doing well, far better than the rest of Michigan. But if your measure of economic success is how well people can pay the bills, save for their retirement and their kids education metro Grand Rapid is not doing so well.

The Michigan Association of United Ways calculates that 39 percent of Kent County households and 34 percent of Ottawa County households earn to little to pay for the basics: housing, child care, food, health care, and transportation. (Statewide 40 percent of Michigan households earn to little to pay for the basics.)

At Michigan Future we believe the goal should be an economy with lots of good-paying jobs, a place with a broad middle class where there is a realistic chance for families to realize the American Dream. Places with low unemployment rates, but also lower personal income, aren’t successful to us. Governor Snyder describes it as more and better jobs. Both matter.

The Bridge article suggests that metro Grand Rapids should replace metro Pittsburgh as a model for Rust Belt revitalization. Lets look at how the two regions compare. First the EPI study found that the average income of the bottom 99 percent in metro Pittsburgh is $45,165. More than $4,000 higher than metro Grand Rapids.

In our last report we compared the two metros (along with four others). The average wage in Pittsburgh is $50,941, in Grand Rapids its $43,801. In terms of how many are working, in metro Pittsburgh 466 of every 1000 resident work, in Grand Rapids its 489.

Combining how many are working and how much they earn metro Pittsburgh is 18th out of 52 metros with populations of one million or more in employment earnings per capita, metro Grand Rapids is 48th. We believe employment earnings per capita is the best measure of how well the state and its regions are doing on Governor Snyder’ goal of more and better jobs. It measures the combination of how many Michiganders are working and how much they earn in wages, self- employment income and employer paid benefits.

Sure seems like Michigan should look to metro Pittsburgh as a model for a region which has gone through the collapse of their dominant factory-based industry and has emerged as once again one of the most prosperous regions in the country.

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.